Inflation-battered grocery shoppers are poised to get a much-needed break in meat prices — thanks to the emerging renewable fuel industry boom.
As it becomes increasingly popular to produce sustainable fuel from processing soybeans, there is a massive amount of a co-product called soymeal produced.
As a result, soymeal — the main ingredient in animal feed — has become more readily available, and thus cheaper, for meat purveyors, according to Bloomberg.
For every one ton of oil to process soybeans, four tons of soymeal is produced, Bloomberg reported.
The cost of that feed makes up roughly 60% of the expense of raising animals before they are sent to the slaughterhouse.
Thus, those cost savings will directly benefit farmers — and are expected to trickle down to grocery stores — though the savings may be months or years away, experts said.
“Meal is going to be priced to disappear and go away,” Gordon Denny, an agricultural consultant and former procurement director at crop giant Bunge Global SA, told Bloomberg.
As a result, “protein in all forms will get a little less expensive.”
Should the renewable fuel industry continue thriving, the US will find itself producing roughly 30% more soymeal in 2026 versus 2022.
This is “quite bearish for soymeal,” Stephens Inc. analyst Ben Bienvenu told Bloomberg.
A drop in meat costs will surely be a welcome relief to Americans, who have been squeezed by stubbornly-high inflation that has driven borrowing costs to a 22-year high as the Federal Reserve works to spur an economic slowdown.
As inflation has risen, so has the price of meat. Chicken breasts retailed at less than $3 per pound in March 2020, according to data from the US Department of Agriculture. By September 2022, prices soared nearly 60%, to $4.75 per pound.
For reference, Americans eat around 100 pounds of chicken annually, per Bloomberg, making elevated prices even more apparent to cash-strapped shoppers
Brian Earnest, the lead protein industry analyst at CoBank, told Bloomberg that when the price of meat starts to fall at the consumer level, they’re likely to arrive in the form of sales, like buy one, get one offers.
“That promotional activity is going to ramp up here this year,” Earnest said.
Per the latest Consumer Price Index, which tracks changes in the costs of everyday goods and services, inflation rose a hotter-than-expected 3.4% in December.
Though the reading is significantly lower than the 6.5% advance in December 2022, there’s still a ways to go before inflation is tamped down to the Fed’s 2% target — a rate the US economy hasn’t seen in over a decade.
The Fed attributed more than half of the 3.4% increase to stiff housing costs, though the index for meats, poultry, fish and eggs also edged higher on a monthly basis.